What changed in this filing

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Item 1. Financial Statements

2026-04-24 compared with 2025-10-22 · 130 added, 200 removed, 511 unchanged (39% of the section changed)

3 unchanged sentences

For the Three Months

For the Nine Months

Ended September 30,

Ended March 31,

(in thousands, except per share data)

2 unchanged sentences

Net realized gains

Net unrealized gains on equity securities

Net unrealized gains (losses) on equity securities

Consolidated revenue

16 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

(in thousands, except share and per share data)

16 unchanged sentences

Goodwill and intangibles

Income taxes-deferred

LIABILITIES AND SHAREHOLDERS’ EQUITY

4 unchanged sentences

Income taxes-deferred

Short-term debt

Long-term debt

Accrued expenses

25 unchanged sentences

Balance, March 31, 2025

Other comprehensive earnings (loss), net of tax

Deferred compensation

Share-based compensation

Dividends and dividend equivalents ($ 0.15 per share)

Balance, June 30, 2024

Other comprehensive earnings (loss), net of tax

Deferred compensation

Share-based compensation

Dividends and dividend equivalents ($ 0.15 per share)

Balance, September 30, 2024

Comprehensive

7 unchanged sentences

Balance, March 31, 2026

Other comprehensive earnings (loss), net of tax

Deferred compensation

Share-based compensation

Dividends and dividend equivalents ($ 0.16 per share)

Balance, June 30, 2025

Other comprehensive earnings (loss), net of tax

Deferred compensation

Share-based compensation

Dividends and dividend equivalents ($ 0.16 per share)

Balance, September 30, 2025

See accompanying notes to the unaudited condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the Nine Months

Ended September 30,

For the Three Months

Ended March 31,

(in thousands)

12 unchanged sentences

Cash Flows from Financing Activities

Proceeds from issuance of debt

Payment of debt

Cash dividends paid

3 unchanged sentences

Cash at the beginning of the period

Cash at September 30,

Cash at March 31,

See accompanying notes to the unaudited condensed consolidated financial statements.

7 unchanged sentences

The results of operations for any interim period are not necessarily indicative of the operating results for a full year.

Certain reclassifications were made to 2025 to conform to the classifications used in the current year.

The preparation of the unaudited condensed consolidated financial statements requires management to make estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the period.

These estimates are inherently subject to change and actual results could differ significantly from these estimates.

On January 15, 2025, RLI Corp.

effected a two -for-one split of its common stock and a proportionate increase in the number of authorized shares.

All share and per share information throughout this report has been retroactively adjusted to reflect the stock split.

The shares of common stock retain a par value of $ 0.01 per share.

ADOPTED ACCOUNTING STANDARDS

1 unchanged sentence

PROSPECTIVE ACCOUNTING STANDARDS

2023-09—Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

The guidance in ASU 2023-09 is designed to increase transparency about income tax information through improvements to the tax rate reconciliation and disclosure of income taxes paid, disaggregated by federal, state and foreign jurisdictions.

This ASU is effective for fiscal years beginning after December 15, 2024.

Although the Company continues to evaluate the impact of adopting this new accounting standard, the amendments are disclosure-related and should not have a material impact on our financial statements.

2024-03—Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

8 unchanged sentences

The guidance in ASU 2025-06 removes the concept of project stages and requires the capitalization of software costs when management has committed to funding the software project and it is probable that the project will be completed.

This ASU is effective for fiscal years beginning after December 15, 2027, but early adoption is permitted as of the beginning of an

annual reporting period.

This ASU is effective for fiscal years beginning after December 15, 2027, but early adoption is permitted as of the beginning of an annual reporting period.

The Company continues to evaluate the impact of adopting this new accounting standard, but does not expect the standard will have a material impact on our financial statements.

4 unchanged sentences

We also review insurance industry developments that may impact the financial condition of our reinsurers.

We analyze the credit risk associated with our reinsurance balances recoverable by monitoring the AM Best and Standard & Poor’s (S&P) ratings of our reinsurers.

We analyze the credit risk associated with our reinsurance balances recoverable by monitoring the AM Best and

Standard & Poor’s (S&P) ratings of our reinsurers.

We subject our reinsurance balances recoverable to detailed recoverability tests, including a segment-based analysis using the average default rating percentage by S&P rating, which assists the Company in assessing the sufficiency of its allowance.

5 unchanged sentences

We then re-evaluate the overall allowance and determine whether the balance is sufficient and, if needed, an additional allowance is recognized.

The allowances for uncollectible amounts on paid and unpaid reinsurance balances recoverable were $ 17 million and $ 11 million, respectively, at September 30, 2025 and $ 17 million and $ 10 million, respectively, at December 31, 2024.

The allowance for uncollectible amounts on paid reinsurance balances receivable was $ 17 million at March 31, 2026 and December 31, 2025.

The allowance for uncollectible amounts on unpaid reinsurance balances recoverable was $ 11 million at March 31, 2026 and December 31, 2025.

Changes in the allowances were due to changes in the amount of reinsurance balances outstanding, the composition of reinsurers from whom the balances were recoverable and their associated S&P default ratings.

No write-offs were applied to the allowances in the first nine months of 2025 and less than $ 1 million was recovered.

No write-offs were applied to the allowances in the first three months of 2026 and less than $ 1 million was recovered.

INTANGIBLE ASSETS

The composition of goodwill and intangible assets at September 30, 2025 and December 31, 2024 is detailed in the following table:

September 30,

The composition of goodwill and intangible assets at March 31, 2026 and December 31, 2025 is detailed in the following table:

(in thousands)

4 unchanged sentences

Based upon these reviews, none of the assets were impaired.

In addition, there were no triggering events as of September 30, 2025 that would suggest an updated impairment test would be needed for our goodwill and intangible assets.

In addition, there were no triggering events as of March 31, 2026 that would suggest an updated impairment test would be needed for our goodwill and intangible assets.

EARNINGS PER SHARE

3 unchanged sentences

Under these circumstances, the diluted net earnings or net loss per share is computed excluding these items.

The following

represents a reconciliation of the numerator and denominator of the basic and diluted EPS computations contained in the unaudited condensed consolidated financial statements:

The following represents a reconciliation of the numerator and denominator of the basic and diluted EPS computations contained in the unaudited condensed consolidated financial statements:

For the Three Months

Ended September 30, 2025

Ended September 30, 2024

(in thousands, except per share data)

(Denominator)

Earnings available to common shareholders

Effect of Dilutive Securities

Stock options and restricted stock units

Earnings available to common shareholders

Anti-dilutive securities excluded from diluted EPS

For the Nine Months

Ended September 30, 2025

Ended September 30, 2024

Ended March 31, 2026

Ended March 31, 2025

(in thousands, except per share data)

9 unchanged sentences

In reporting the components of comprehensive earnings, we used the federal statutory tax rate of 21 percent.

Other comprehensive earnings (loss), as shown in the consolidated statements of earnings and comprehensive earnings, is net of tax expense of $ 7 million for the third quarter of 2025, compared to $ 21 million for the same period in 2024.

For the nine-month period ended September 30, 2025, other comprehensive earnings (loss) is net of tax expense of $ 20 million, compared to $ 16 million for the same period in 2024.

Unrealized gains, net of tax, recognized in other comprehensive earnings (loss) were $ 76 million for the first nine months of 2025, compared to $ 60 million in the first nine months of 2024.

The unrealized gains were attributable to a decrease in interest rates, which increased the fair value of securities held in the fixed income portfolio.

Other comprehensive earnings (loss), as shown in the consolidated statements of earnings and comprehensive earnings, is net of tax benefit of $ 7 million for the first quarter of 2026, compared to $ 8 million of tax expense for the same period in 2025.

Unrealized losses, net of tax, recognized in other comprehensive earnings (loss) were $ 25 million for the first three months of 2026, compared to $ 30 million of unrealized gains, net of tax, in the first three months of 2025.

The unrealized losses in 2026 were attributable to an increase in interest rates, which decreased the fair value of securities held in the fixed income portfolio.

Interest rates decreased during 2025, which increased the fair value of securities held in the fixed income portfolio.

The following table illustrates the changes in the balance of each component of accumulated other comprehensive earnings (loss) for each period presented in the unaudited condensed consolidated financial statements:

1 unchanged sentence

For the Three Months

For the Nine Months

Ended September 30,

Ended March 31,

Unrealized Gains (Losses) on Available-for-Sale Securities

11 unchanged sentences

For the Three Months

For the Nine Months

Component of Accumulated

Ended September 30,

Ended March 31,

Affected line item in the

25 unchanged sentences

All bonds valued using these techniques are classified as Level 2.

All corporate, agency, government and municipal securities are deemed Level 2.

Mortgage-backed Securities (MBS)/Commercial Mortgage-backed Securities (CMBS) and Asset-backed Securities (ABS):

8 unchanged sentences

All Regulation D privately-placed bonds are classified as corporate securities and deemed Level 3.

The pricing vendor evaluation methodology for these securities includes a combination of

observable and unobservable inputs.

The pricing vendor evaluation methodology for these securities includes a combination of observable and unobservable inputs.

Observable inputs include public corporate spread matrices classified by sector, rating and average life, as well as investment and non-investment grade matrices created from fixed income indices.

10 unchanged sentences

Equity Securities:

As of September 30, 2025, nearly all of our equity holdings were traded on an exchange.

As of March 31, 2026, nearly all of our equity holdings were traded on an exchange.

Exchange traded equities have readily observable price levels and are classified as Level 1 (fair value based on quoted market prices).

6 unchanged sentences

Realized gains and losses on disposition of investments are based on the specific identification of the investments sold on the settlement date.

The following is a summary of the disposition of fixed income and equity securities for the nine-month periods ended September 30, 2025 and 2024:

The following is a summary of the disposition of fixed income and equity securities for the three-month periods ended March 31, 2026 and 2025:

Gross Realized

10 unchanged sentences

FAIR VALUE MEASUREMENTS

Assets measured at fair value on a recurring basis as of September 30, 2025 and December 31, 2024 are summarized below:

As of September 30, 2025

Assets measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025 are summarized below:

As of March 31, 2026

Quoted Prices in

8 unchanged sentences

Equity securities

Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities

As of December 31, 2025

11 unchanged sentences

The following table summarizes changes in the balance of securities whose fair value was measured using significant unobservable inputs (Level 3).

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

5 unchanged sentences

Transfers out of Level 3

Balance as of September 30,

Balance as of March 31,

Change in unrealized gains (losses) during the period for Level 3 assets held at period-end - included in other comprehensive earnings (loss)

The amortized cost and fair value of available-for-sale fixed income securities by contractual maturity as of September 30, 2025 were as follows:

September 30, 2025

The amortized cost and fair value of available-for-sale fixed income securities by contractual maturity as of March 31, 2026 were as follows:

March 31, 2026

(in thousands)

7 unchanged sentences

Asset-backed, commercial mortgage-backed and mortgage-backed securities

The amortized cost and fair value of available-for-sale securities at September 30, 2025 and December 31, 2024 are presented in the tables below.

Amortized cost does not include accrued interest receivable of $ 28 million as of September 30, 2025 and $ 27 million as of December 31, 2024.

September 30, 2025

The amortized cost and fair value of available-for-sale securities at March 31, 2026 and December 31, 2025 are presented in the tables below.

Amortized cost does not include accrued interest receivable of $ 29 million as of March 31, 2026 and $ 29 million as of December 31, 2025.

March 31, 2026

(in thousands)

20 unchanged sentences

The allowance for any security is limited to the amount that the security’s fair value is below amortized cost.

As of September 30, 2025, the discounted cash flow analysis resulted in an allowance for credit losses on 12 securities.

As of March 31, 2026, the discounted cash flow analysis resulted in an allowance for credit losses on 8 securities.

The following table presents changes in the allowance for expected credit losses on available-for-sale securities:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

2 unchanged sentences

Reduction from securities sold during the period

Reductions from intent to sell securities

Net increase (decrease) from securities that had an allowance at the beginning of the period

Balance as of September 30,

We recognized less than $ 1 million of losses on securities for which we no longer had the intent to hold until recovery during the first nine months of 2025.

No such losses were recognized during the first nine months of 2024.

As of September 30, 2025, in addition to the securities included in the allowance for credit losses, the fixed income portfolio contained 1,077 securities with an unrealized loss position for which an allowance for credit losses had not been recorded.

Balance as of March 31,

We recognized $ 1 million of losses on securities for which we no longer had the intent to hold until recovery during the first three months of 2026.

No such losses were recognized during the first three months of 2025.

As of March 31, 2026, in addition to the securities included in the allowance for credit losses, the fixed income portfolio contained 1,328 securities with an unrealized loss position for which an allowance for credit losses had not been recorded.

The $ 156 million in associated unrealized losses represents 4 percent of the fixed income portfolio’s cost basis and 3 percent of total invested assets.

Isolated to these securities, unrealized losses decreased through the first nine months of 2025, as bonds rallied on falling interest rates.

Isolated to these securities, unrealized losses increased through the first three months of 2026, as interest rates increased during the period.

Of the total 1,328 securities, 777 have been in an unrealized loss position for 12 consecutive months or longer.

The following table illustrates the total value of fixed income securities that were in an unrealized loss position as of September 30, 2025 and December 31, 2024 after factoring in the allowance for credit losses.

The following table illustrates the total value of fixed income securities that were in an unrealized loss position as of March 31, 2026 and December 31, 2025 after factoring in the allowance for credit losses.

All fixed income securities continue to pay the expected coupon payments and we believe we will recover the amortized cost basis of available-for-sale securities that remain in an unrealized loss position.

September 30, 2025

March 31, 2026

December 31, 2025

19 unchanged sentences

Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities

The following table shows the composition of the fixed income securities in unrealized loss positions, after factoring in the allowance for credit losses, at September 30, 2025 by the National Association of Insurance Commissioners (NAIC) rating and the generally equivalent Standard & Poor’s (S&P) and Moody’s ratings.

The following table shows the composition of the fixed income securities in unrealized loss positions, after factoring in the allowance for credit losses, at March 31, 2026 by the National Association of Insurance Commissioners (NAIC) rating and the generally equivalent Standard & Poor’s (S&P) and Moody’s ratings.

The vast majority of the securities are rated by S&P and/or Moody’s.

1 unchanged sentence

Other Invested Assets

We had $ 56 million of other invested assets at September 30, 2025, compared to $ 58 million at December 31, 2024.

We had $ 61 million of other invested assets at March 31, 2026, compared to $ 59 million at December 31, 2025.

Other invested assets include investments in low-income housing tax credit partnerships (LIHTC) and historic tax credit partnerships (HTC), membership in the Federal Home Loan Bank of Chicago (FHLBC), and investments in private funds.

LIHTC and HTC investments are carried at amortized cost and our investment in FHLBC stock is carried at cost.

Our LIHTC and

HTC investments are carried at amortized cost and our investment in FHLBC stock is carried at cost.

Due to the nature of the LIHTC, HTC and our membership in the FHLBC, their carrying amounts approximate fair value.

The private funds are carried at fair value, using each investment’s net asset value.

Our LIHTC interests increased to $ 10 million at September 30, 2025, compared to $ 7 million at December 31, 2024, as additional investments were made.

Our LIHTC interests recognized amortization of $ 1 million as a component of income tax expense and a total tax benefit of $ 1 million during the third quarter of 2025 and 2024.

For the nine-months ended September 30, 2025 and 2024, our LIHTC interests recognized amortization of $ 2 million and a total tax benefit of $ 2 million.

Our unfunded commitment for our LIHTC investments was $ 4 million at September 30, 2025 and will be paid out in installments through 2039.

Our HTC investment had a balance of $ 12 million at September 30, 2025, compared to $ 15 million at December 31, 2024.

Our HTC investment recognized $ 1 million of amortization as a component of income tax expense and a total tax benefit of $ 1 million during the third quarter of 2025, compared to $ 1 million of amortization and $ 2 million of tax benefit for the same period in 2024.

For the nine-months ended September 30, 2025, our HTC investment recognized amortization of $ 3 million and a total tax benefit of $ 3 million, compared to $ 3 million of amortization and a total tax benefit of $ 4 million for the same period in 2024.

Our unfunded commitment for our HTC investments was $ 4 million at September 30, 2025 and will be paid out in installments through 2027.

At September 30, 2025, $ 55 million of investments were pledged as collateral with the FHLBC to ensure timely access to the secured lending facility that ownership of FHLBC stock provides.

At September 30, 2025, $ 50 million of borrowings were outstanding with the FHLBC.

Our investments in private funds totaled $ 18 million at September 30, 2025, down from $ 24 million at December 31, 2024, and had $ 3 million of associated unfunded commitments at September 30, 2025.

Our LIHTC interests were $ 13 million at March 31, 2026, compared to $ 14 million at December 31, 2025.

Our LIHTC interests recognized amortization of less than $ 1 million as a component of income tax expense and a total tax benefit of $ 1 million during the first quarter of 2026 and 2025.

Our unfunded commitment for our LIHTC investments was $ 8 million at March 31, 2026 and will be paid out in installments through 2040.

Our HTC investment had a balance of $ 10 million at March 31, 2026, compared to $ 11 million at December 31, 2025.

Our HTC investment recognized less than $ 1 million of amortization as a component of income tax expense and a total tax benefit of $ 1 million during the first quarter of 2026, the same as in 2025.

Our unfunded commitment for our HTC investments was $ 4 million at March 31, 2026 and will be paid out in installments through 2027.

At March 31, 2026, $ 52 million of investments were pledged as collateral with the FHLBC to ensure timely access to the secured lending facility that ownership of FHLBC stock provides.

At March 31, 2026, $ 50 million of borrowings were outstanding with the FHLBC.

Our investments in private funds totaled $ 19 million at March 31, 2026, up from $ 18 million at December 31, 2025, and had $ 2 million of associated unfunded commitments at March 31, 2026.

Our interest in private funds is generally restricted from being transferred or otherwise redeemed without prior consent by the respective entities, and the timed dissolution of the partnerships would trigger redemption.

Investments in Unconsolidated Investees

We had $ 64 million of investments in unconsolidated investees at September 30, 2025, compared to $ 56 million at December 31, 2024.

At September 30, 2025, our investment in Prime Holdings Insurance Services, Inc.

(Prime) was $ 63 million and other investments in unconsolidated investees totaled less than $ 1 million.

Our investment in Prime Holdings Insurance Services, Inc.

was $ 56 million at March 31, 2026, compared to $ 54 million at December 31, 2025.

Cash and Short-Term Investments

Cash consists of uninvested balances in bank accounts.

Short-term investments consist of investments with original maturities of 90 days or less, primarily AAA-rated government money market funds.

Short-term investments are carried at cost.

We had a cash and short-term investment balance of $ 53 million and $ 166 million, respectively, at September 30, 2025, compared to $ 40 million and $ 75 million, respectively, at December 31, 2024.

Short-term investments primarily consist of money market funds and fixed income securities with a contractual maturity of one year or less at the time of acquisition.

Short-term investments are carried at cost, which approximates fair value.

We had a cash and short-term investment balance of $ 49 million and $ 386 million, respectively, at March 31, 2026, compared to $ 52 million and $ 121 million, respectively, at December 31, 2025.

Outstanding debt totaled $ 347 million as of March 31, 2026, consisting of $ 297 million of long-term debt, net of unamortized discount and debt issuance costs, and $ 50 million of short-term debt.

On March 3, 2026, we completed a public debt offering, issuing $ 300 million of senior notes maturing June 1, 2036 , with interest payable semi-annually at a rate of 5.375 percent.

The notes were issued at a discount, resulting in proceeds of $ 297 million after deducting the discount and issuance costs.

The discount is being amortized to interest expense over the life of the debt using the effective interest method.

The average rate on long-term debt was 5.38 percent for the three months ended March 31, 2026.

The estimated fair value of the senior notes was $ 288 million as of March 31, 2026.

The fair value of our long-term debt is based on limited observable prices and is therefore classified as a Level 2 liability within the fair value hierarchy.

We repaid $ 50 million that was outstanding under our revolving credit facility with PNC Bank, N.A.

(PNC) on February 20, 2026, which had been drawn in 2023.

The borrowing carried an adjustable interest rate of 5.27 percent as of February 20, 2026.

The credit facility with PNC, which was entered into during the first quarter of 2023, provided borrowing capacity of $ 100 million and had a three -year term that was scheduled to expire on May 29, 2026 .

On February 26, 2026, we entered into an amended and restated credit agreement with PNC to extend the maturity date to February 26, 2031 .

The amended agreement provides borrowing capacity of $ 150 million and may be increased to $ 200 million under certain conditions.

On November 12, 2025, we borrowed $ 50 million from the Federal Home Loan Bank of Chicago (FHLBC), which replaced the $ 50 million borrowed in 2024.

The borrowing matures on November 12, 2026 , but may be repaid early at set quarterly dates.

Interest is paid monthly at an annualized rate of 4.21 percent.

Due to the lack of marketability and short tenor of our short-term borrowings, its fair value approximates carrying value.

The average rate on short-term debt was 4.61 percent during the first quarter of 2026, compared to 5.18 percent during the first quarter of 2025.

The weighted average interest rate on short-term debt outstanding was 4.21 percent as of March 31, 2026.

HISTORICAL LOSS AND LAE DEVELOPMENT

The following table is a reconciliation of our unpaid losses and settlement expenses (LAE) for the first nine months of 2025 and 2024:

For the Nine Months

Ended September 30,

The following table is a reconciliation of our unpaid losses and settlement expenses (LAE) for the first three months of 2026 and 2025:

For the Three Months

Ended March 31,

(in thousands)

7 unchanged sentences

Prior accident years

Net unpaid losses and LAE at September 30,

Unpaid losses and LAE at September 30,

For the first nine months of 2025, incurred losses and LAE included $ 74 million of favorable development on prior years’ loss reserves, largely from accident years 2019 through 2022 and 2024.

Commercial excess liability, marine, surety, commercial property, general liability and our mortgage reinsurance program were drivers of the favorable development.

While no products experienced significant adverse development, auto liability exposures developed adversely for some products, most notably in commercial transportation.

For the first nine months of 2024, incurred losses and LAE included $ 85 million of favorable development on prior years’ loss reserves, largely from accident years 2016, 2017, 2019, 2020, 2022 and 2023.

Marine, surety, commercial property, commercial excess liability, general liability, professional services, executive products and personal umbrella were drivers of the favorable development.

No products experienced significant adverse development.

Our effective tax rate for the three and nine months ended September 30, 2025 was 20.8 percent and 20.4 percent, compared to 18.7 percent and 19.8 percent for the same periods in 2024.

Net unpaid losses and LAE at March 31,

Unpaid losses and LAE at March 31,

For the first three months of 2026, incurred losses and LAE included $ 35 million of favorable development on prior years’ loss reserves, primarily related to accident years 2018, 2019, 2022, 2024 and 2025.

Favorable development was driven by commercial property, marine, executive products, professional services and commercial transportation.

While personal umbrella experienced adverse development, no products had significant adverse development.

For the first three months of 2025, incurred losses and LAE included $ 31 million of favorable development on prior years’ loss reserves, primarily related to accident years 2019 through 2022 and 2024.

Favorable development was driven by marine, surety, commercial property, commercial excess liability, general liability and our mortgage reinsurance program.

Personal umbrella and commercial transportation had adverse development related to auto exposures, but no products experienced significant adverse development.

Our effective tax rate for the three months ended March 31, 2026 was 18.5 percent, compared to 19.6 percent for the same period in 2025.

Effective rates are dependent upon components of pretax earnings and the related tax effects.

The effective tax rate was higher for the three and nine month periods in 2025 due to lower levels of tax-favored adjustments and higher levels of pretax income, which decreased the percentage impact of the tax-favored adjustments.

Income tax expense attributable to income from operations for the three and nine-month periods ended September 30, 2025 and 2024 differed from the amounts computed by applying the U.S.

The decrease in the effective tax rate for the three-month period in 2026 was primarily due to higher levels of tax credit utilization.

Income tax expense attributable to income from operations for the three-month periods ended March 31, 2026 and 2025 differed from the amounts computed by applying the U.S.

federal tax rate of 21 percent to pretax income by the items detailed in the table below.

In interim periods, income taxes are adjusted to reflect the effective tax rate we anticipate for the year, with adjustments flowing through the other items, net line.

For the Three Months Ended September 30,

For the Nine Months Ended September 30, 2025

For the Three Months Ended March 31,

(in thousands)

Provision for income taxes at the statutory rate of 21 %

Increase (reduction) in taxes resulting from:

federal statutory tax rate

State and local income taxes, net of federal income tax effect

Nontaxable or Nondeductible Items:

Excess tax benefit on share-based compensation

Tax exempt interest income

Dividends received deduction

ESOP dividends paid deduction

Nondeductible expenses

Other items, net

Other nontaxable or nondeductible items

Total tax expense

1 unchanged sentence

We believe it is more likely than not that all deferred tax assets will be recovered, given the carry back availability as well as the result of future operations, which we believe will generate sufficient taxable income to realize the deferred tax asset.

The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025.

The primary implications to the Company include the timing of when depreciation and other capitalized costs can be deducted for tax purposes.

Adopting the tax provisions in the OBBBA did not have a material impact on our financial statements.

STOCK BASED COMPENSATION

13 unchanged sentences

Compensation expense is based on the probable number of awards expected to vest.

The total compensation expense related to equity awards was $ 2 million and $ 6 million in the three and nine-month periods ended September 30, 2025 and 2024.

The total income tax benefit was less than $ 1 million for the three and nine-month periods ended September 30, 2025 and 2024.

The total compensation expense related to equity awards was $ 2 million in the three-month periods ended March 31, 2026 and 2025.

The total income tax benefit was less than $ 1 million for the three-month periods ended March 31, 2026 and 2025.

Total unrecognized compensation expense relating to outstanding and unvested awards was $ 5 million, which will be recognized over the weighted average vesting period of 2.47 years.

4 unchanged sentences

For participants who are retirement eligible, defined by the plan as those individuals whose age and years of service equals 75 or greater, the requisite service period is deemed to be met and options are immediately expensed on the date of grant.

For participants who will

become retirement eligible during the vesting period, the requisite service period over which expense is recognized is the period between the grant date and the attainment of retirement eligibility.

For participants who will become retirement eligible during the vesting period, the requisite service period over which expense is recognized is the period between the grant date and the attainment of retirement eligibility.

Shares issued upon option exercise are newly issued shares.

The following tables summarize option activity for the nine-month period ended September 30, 2025:

The following tables summarize option activity for the three-month period ended March 31, 2026:

Exercise Price

4 unchanged sentences

Options canceled/forfeited

Outstanding options at September 30, 2025

Exercisable options at September 30, 2025

The intrinsic value of options exercised, which is the difference between the fair value and the exercise price, was $ 4 million and $ 19 million during the first nine months of 2025 and 2024, respectively.

The fair value of options was estimated using a Black-Scholes based option pricing model with the following weighted average grant-date assumptions and weighted average fair values as of September 30:

Outstanding options at March 31, 2026

Exercisable options at March 31, 2026

The intrinsic value of options exercised, which is the difference between the fair value and the exercise price, was $ 1 million and $ 2 million during the first three months of 2026 and 2025, respectively.

The fair value of options was estimated using a Black-Scholes based option pricing model with the following weighted average grant-date assumptions and weighted average fair values as of March 31:

Weighted-average fair value of grants

13 unchanged sentences

In addition, the RSUs have dividend participation, which accrue as additional units and are settled with granted stock units at the end of the vesting period.

The total fair value of restricted stock units that vested was $ 3 million and $ 2 million during the first nine months of 2025 and 2024, respectively.

The total fair value of restricted stock units that vested was less than $ 1 million during the first three months of 2026, while no RSUs vested in the first three months of 2025.

Nonvested at January 1, 2026

Nonvested at September 30, 2025

Nonvested at March 31, 2026

OPERATING SEGMENT INFORMATION

9 unchanged sentences

General corporate expenses include director and shareholder relation costs and other compensation-related expenses incurred for the benefit of the corporation, but not attributable to the operations of our insurance segments.

Investee earnings primarily represents our 23 percent share in earnings of Prime Holdings Insurance Services, Inc., a privately held insurance company which specializes in hard-to-place risks.

Investee earnings represents our 23 percent share in earnings of Prime Holdings Insurance Services, Inc., a privately held insurance company which specializes in hard-to-place risks.

Assets, and the revenues and expenses associated with investing and financing activities, are not managed at the segment level and therefore are not allocated to segments.

3 unchanged sentences

For the Three Months

For the Nine Months

Net Premiums Earned

Ended September 30,

Ended March 31,

(in thousands)

1 unchanged sentence

Commercial transportation

General liability

Professional services

General liability

Small commercial

5 unchanged sentences

The following tables present our operating results by segment, as evaluated by the CODM.

For the Three Months Ended September 30, 2025

(in thousands)

Net premiums earned

Net investment income

Net realized gains

Net unrealized gains on equity securities

Consolidated revenue

Losses and settlement expenses

Amortization of deferred acquisition costs

Other policy acquisition costs

Insurance operating expenses

Segment earnings before income taxes

Depreciation and amortization expense

For the Three Months Ended September 30, 2024

(in thousands)

Net premiums earned

Net investment income

Net realized gains

Net unrealized gains on equity securities

Consolidated revenue

Losses and settlement expenses

Amortization of deferred acquisition costs

Other policy acquisition costs

Insurance operating expenses

Segment earnings before income taxes

Depreciation and amortization expense

For the Nine Months Ended September 30, 2025

For the Three Months Ended March 31, 2026

(in thousands)

2 unchanged sentences

Net realized gains

Net unrealized gains on equity securities

Net unrealized gains (losses) on equity securities

Consolidated revenue

5 unchanged sentences

Depreciation and amortization expense

For the Nine Months Ended September 30, 2024

For the Three Months Ended March 31, 2025

(in thousands)

2 unchanged sentences

Net realized gains

Net unrealized gains on equity securities

Net unrealized gains (losses) on equity securities

Consolidated revenue

7 unchanged sentences

For the Three Months

For the Nine Months

Ended September 30,

Ended March 31,

(in thousands)

3 unchanged sentences

Net realized gains

Net unrealized gains on equity securities

Net unrealized gains (losses) on equity securities

Interest expense on debt

12 unchanged sentences

The Company’s operating lease obligations are for branch office facilities.

The components of lease expense and other lease-related information, as of and during the three and nine-month periods ended September 30, 2025 and 2024, were as follows:

The components of lease expense and other lease-related information, as of and during the three-month periods ended March 31, 2026 and 2025, were as follows:

For the Three Months

For the Nine Months

Ended September 30,

Ended March 31,

(in thousands)

7 unchanged sentences

(in thousands)

September 30, 2025

March 31, 2026

December 31, 2025

3 unchanged sentences

Weighted-average discount rate - operating leases

Future minimum lease payments under non-cancellable leases as of September 30, 2025 were as follows:

Future minimum lease payments under non-cancellable leases as of March 31, 2026 were as follows:

(in thousands)

September 30, 2025

March 31, 2026

Total future minimum lease payments

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements